A proposed ban on menthol cigarettes might seem like another nail in the coffin for the cigarette industry, including Reynolds American's 2-million-square-foot Tobaccoville plant. But analysts say the proposal, announced in mid-November by the Food and Drug Administration, isn't likely to have much of a short-term impact on the traditional cigarette business.
Menthols account for 35% of cigarettes sold in the U.S. Newport, a menthol produced by Reynolds, is the No. 2 cigarette in the U.S. with a 14% overall market share.
The reason for the proposed regulations, which also include restricting e-cigarette flavors, is to prevent kids from smoking. Youth smokers are more likely to smoke menthols than any other age group, and "Juuling," or vaping, has become more widespread among high-school kids--e-cig usage among that age group is up 78% from 2017. Health effects of vaping are still unknown, as many of the chemicals in them are FDA-approved for ingestion rather than inhalation, according to researchers at UNC School of Medicine.
"The data show that kids using e-cigarettes are going to be more likely to try combustible cigarettes later," FDA Commissioner Scott Gottlieb, a cancer survivor and father of three, wrote in the November report.
But analysts say there might not be enough scientific evidence to prove menthol is more dangerous than other products. Also, the cigarette industry would probably challenge a ban in court, with the process likely to take at least a couple of years.
The FDA directed its Center for Tobacco Products to revisit its compliance policies, and the agency also plans to solicit additional public comments on the proposed changes...